Vertex_Sole_Source_JA_Policy_Redacted.pdf

Sole Source (Including Brand Name) Justification - Simplified Procedures for Certain Commercial Items

FAR 13.5 Sole Source Justification

25 May 2018 FAR 13.5 Sole Source Justification Page 3 of 5

I. Contracting Activity.

The Air Force Life Cycle Management Center (AFLCMC), Business Enterprise Systems (BES) Directorate, Human Resources Systems Division Contracting Office (HIHK), located at 1960 1st Street West, Building 977, Joint Base San Antonio (JBSA) - Randolph, Texas 78150, supports the Human Resources Systems Division Program Management Office (PMO) for Vertex tax table data subscription requirement. This is a justification for Sole Source.

II. Nature and/or description of the action being processed.

This action will result in a new Firm-Fixed Price (FFP) contract for Vertex Payroll Tax Q series tax table data subscription and maintenance and is structured as follows: 3 year contract consisting of one 12 month base, two 12 month options, total period of performance (PoP) from 1 October 2018 through 30 September 2021.

III. Description of supplies/services required to meet agency needs.

Vertex Payroll Tax Q series is a tax table data software subscription populated and updated (Federal, state, and local tax rates as formulas change) by a monthly load from Vertex Inc. The tax data provided will be used for tax withholding algorithms when generating payroll checks for 508,000 military members for use in the Air Force Integrated Personnel Payroll System (AFIPPS). The AFIPPS program will integrate Payroll with Human Resources using Oracle E-Business Suite (Oracle EBS) software. Vertex Tax software is a supporting product within Oracle EBS which provides, gathers, and uploads tax data. Without the data subscription, AFIPPS will lack the functionality required to generate accurate employee paychecks. Total estimated value of this action is $1,487,209.00. The total PoP is anticipated to be 1 October 2018 through 30 September 2021 with one CLIN per year (base plus 2 options). The action will use RDT&E (3600) appropriations. The contract requirement would be streamlined for the next three years as follows:

CLIN Year Price 0001 Year 1 $727,771.00 3600 Funds 1001 Year 2 $379,719.00 3600 Funds 2001 Year 3 $379,719.00 3600 Funds Total $1,487,209.00

CLIN 001 is higher than years 2 and Year 3 due to the initial licensing subscription fees and software updates necessary to bring the software to current version.

IV. Statutory authority permitting other than full and open competition.

AFFARS 5313.501 - 10 U.S.C. 2302b, Implementation of Simplified Acquisition Procedures (41 U.S.C. 1901)

V. Demonstration that the contractor's unique qualifications or nature of the acquisition requires the use of the authority cited above (applicability of authority).

As stated in section III, The Vertex Payroll Tax Q Series is a supporting product within Oracle EBS used in the Air Force's current Military Personnel Data System (MilPDS). MilPDS will be the foundation for AFIPPS. The Oracle-based AFIPPS (Air Force Integrated Personnel and Pay System) program was initiated to respond to Congressional direction for DoD departments to integrate payroll and human resources management in order to increase efficiency, reduce costs, and take advantage of the modern technologies available with commercial software. The tax tables that Vertex provides contain the tax rates needed in order to calculate tax withholding for military member payroll checks. Procuring the Vertex subscription is a necessity because it is the only tax table generation software bundled within the Oracle EBS COTS product. Oracle has incurred the costs of integrating Vertex into the Oracle EBS COTS product, therefore it is not in the best interest of the government (in either cost or time) to use any other commercially available tax software.

Oracle EBS is the approved and validated foundational database for MilPDS. There are no current plans to change the

Sole Source (Including Brand Name) Justification - Simplified Procedures for Certain Commercial Items

25 May 2018 FAR 13.5 Sole Source Justification Page 4 of 5 database that supports MilPDS as the government spends $20M in maintenance costs annually; therefore, the Air Force must continue to purchase Oracle licenses and accompanying software to maintain the functionality of the database.

The overall cost impact to MilPDS and AFIPPS is unknown in dollars however, there are over 500K military members that would be adversely effected by an interruption in pay. Any discussion of moving away from the Oracle software products has not been initiated and will most likely not take place until after both MilPDS and AFFIPS have completed their program life cycle.

Vertex is currently the only integrated tax table generation software within Oracle EBS which is already in use, but the product requires annual licensing separate from Oracle licensing. Seamless integration between the Vertex Tax software and the Oracle EBS Payroll software is critical to the Air Force successfully calculating payroll once AFIPPS is fielded. Vertex does not provide third party licensing by Oracle or resellers, therefore they require direct license support from Vertex to the end user.

Integration of another tax table generation software would require extensive development and testing by Oracle or the Government at a high cost. If the Government were to try and develop alternative sources the Government would have to purchase the data rights to the Oracle EBS at a cost not likely to be recovered through competition. If another product was selected through competition, it would require extensive testing and potential code customization to ensure that it meets the full tax table requirements and is capable of sitting on top of Oracle EBS without interfering with future Oracle updates. This testing would result in significant schedule delays to the AFIPPS program. Other products were discussed with Oracle during the market research phase and Vertex was the only tax software approved by Oracle to run on Oracle EBS that has the full range of tax generation capabilities necessary to meet the Air Force's requirement for AFIPPS.

VI. Description of efforts made to ensure that offers are solicited from as many potential sources as practicable.

An Offer will be solicited only from Vertex. For the reasons stated in Section V, only a license for Vertex Payroll Tax Q Series software will satisfy the Government's needs. At this time the required software license for Vertex Payroll Tax Series Q software is only available directly from Vertex.

VII. Determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The Procuring Contracting Officer (PCO) will make a determination that the price to the Government will be fair and reasonable based on price analysis. This is a commercially available product, the price analysis will be accomplished by a review of the Vertex published price list, a comparison of the proposed price with prices found reasonable on previous software license purchases and a comparison with similar items in a related industry in accordance with FAR 13.106-3

VIII. Description of the market research conducted and the results, or a statement of the reasons market research was not conducted.

For the reasons stated in Section V, only Vertex Payroll Tax Q Series software will satisfy the Government's needs, consequently other payroll tax software products were not considered. Market research was limited to whether the required software license is available from sources other than Vertex.

AFLCMC/HIHK issued and RFI to all NETCENTS-2 vendors, in which, all vendors responded with a no bid or non-responsive to the RFI. The DoD ESI website showed no software agreements with Vertex nor did Oracle have the product listed under its resellers. GSA Advantage website also showed no Vertex products available for purchase. Open Internet searches confirmed that the Vertex Payroll Tax Q Series tax table data subscription is only available from Vertex.

Sole Source (Including Brand Name) Justification - Simplified Procedures for Certain Commercial Items

25 May 2018 FAR 13.5 Sole Source Justification Page 5 of 5

IX. Any other facts supporting the use of Other Than Full and Open Competition.

The AFIPPS strategy approved by the SECAF was based in part on the payroll proof of concept demonstrated during the course of action (COA) analysis that used the Vertex tax software in conjunction with the Oracle EBS Payroll. The need to ensure that proof of concept prototype can be delivered, using the Vertex software is critical to the integration with Oracle.

X. List of any sources that expressed, in writing, an interest in the acquisition.

None. Only the OEM Vertex.

XI. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before making subsequent acquisitions for the supplies or services required.

AFLCMC/HIH will continue to monitor any changes to Vertex's policy to resell the product through other vendors, however, there are no feasible actions that could develop future competition for the requested COTS product. It is unknown by the Government if Oracle has any future requirements to change their teaming arrangement with Vertex for tax generation data gathering.

XII. Certification by the Contracting Officer.

As evidenced by my signature above, I have determined this document to be both accurate and complete to the best of my knowledge and belief.

XIII. Certification by the technical/requirements personnel.

As evidenced by my (our) signature(s) above, I (we) certify that any supporting data contained herein, which is my (our) responsibility, is both accurate and complete.